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Cash out for paid off rentals for tax purposes?
Old 10-07-2019, 10:54 AM   #1
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Cash out for paid off rentals for tax purposes?

Dear real estate rentals investors and tax gurus:
Is it better to cash out paid off rentals to get tax interest deduction ? (DW and I currently also have regular jobs)
I donít really need the cash and it will be park in a saving account waiting for the right opportunity to invest in the stock market and real estate markets.
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Old 10-07-2019, 11:19 AM   #2
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Quote:
Originally Posted by Smilefun View Post
Dear real estate rentals investors and tax gurus:
Is it better to cash out paid off rentals to get tax interest deduction ? (DW and I currently also have regular jobs)
I donít really need the cash and it will be park in a saving account waiting for the right opportunity to invest in the stock market and real estate markets.
1031 exchange to reset the basis...and reap the tax rewards?

I don't know what you mean by interest deduction? IF it's paid off, why would you be getting any interest deduction on your taxes?
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Old 10-07-2019, 11:30 AM   #3
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I am not refi ing my units to take out cash. Instead stashing the cash to add more when the time
Is right. I like the cash flow.
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Old 10-07-2019, 12:43 PM   #4
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Unless you can find a HELOC or HEL with an interest rate less than the typical savings account, I would question why you would want to do this.

Even if you find such an anomaly, I would doubt that it would last long.

-gauss
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Old 10-07-2019, 01:40 PM   #5
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Paying $1,000 interest payment to avoid $300 in taxes doesn't make sense. Ever.
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Old 10-07-2019, 01:46 PM   #6
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From my perspective real estate becomes a better investment with the right leverage vs real estate with no leverage.

But the right leverage has to have a good interest rate (sig lower than your CAP rate) for a reasonable period of time extending further than targeted hold period, not so much percent of LTV that your property canít sustain a mild decline in value and still be above water if you sell, AND. it should have a generous debt service coverage ratio.

If it has all of those things leverage is good and you can buy more and make more
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